The relaunched Technology Upgradation Fund Scheme (Tufs) for the textile sector, offering subsidised funding for modernisation, has received an encouraging response so far, unlike last year.

Says A B Joshi, the Union government’s textile commissioner: “We have applications seeking subsidy for over Rs 3,500 crore, for 2,800 aspirants.” In all of last year, subsidy worth only Rs 1,018 crore was sanctioned, due to poor response.

A sum of Rs 7,052 crore has been sanctioned under the restructured Tufs, relaunched last month in its third phase. The money was to be used in the 12th five-year Plan (2012-17), though this is yet to be officially finalised.

The scheme provides reimbursement of five per cent of the interest charged by lending agencies for facilitating investment in modernisation of textile and jute industries. It is being operated through major government banks, the Small Industries Development Bank of India and the Industrial Finance Corporation of India.

The ministry had allocated Rs 1,972 crore for this in 2011-12 but was able to approve a subsidy value of only Rs 1,018 crore, or a little over 50 per cent only.

However, the remaining amount of Rs 954 crore was added to the Rs 3.614 crore earmarked for this year.

The scheme was hugely successful in its first phase, 1999-2010, when Rs 11,200 crore of subsidy was given, generating investment of Rs 208,000 crore.

Rahul Mehta, president of The Clothing Manufacturers Association of India, attributed the weak response in 2011-12 to the restructured Tufs to poor investment in the sector due to a general economic slowing. Apparel demand was hampered due to weak global economic sentiment, with reduced orders from the home market and those in the European Union and America. The EU accounts for 49 per cent of India’s overall apparel export.